Britain and the EU

Should Britain's government offer an in-out referendum on EU membership?

DESPITE stiff competition from local and mayoral election results involving almost 200 local authorities across England, Wales and Scotland, Peter Mandelson, the former Labour cabinet minister, co-inventor of Blairism and ex-European Union trade commissioner, is set to make headlines this afternoon by calling for Britain to hold an in-out referendum on EU membership.

Voices on the Tory right have already reacted with enthusiasm, with ConservativeHome arguing that David Cameron should follow Lord Mandelson's lead and announce an in-out referendum. Con Home explicitly says that the value of such a vote would be to neutralise the threat from the United Kingdom Independence Party, the anti-EU protest party which is today being credited or blamed (depending on who is doing the reporting) with triggering defeats for the Conservatives in such previous Tory strongholds as Thurrock in Essex and Tunbridge Wells in Kent.

Some caveats are needed at this point. Nobody is expecting UKIP to pick up lots of seats in the House of Commons at the next general election. There is considerable polling and focus group evidence that Europe is not, in fact, the top issue for core UKIP voters, who are more angry and anxious about immigration, globalisation (though this is expressed as anxiety about the economy) and what they see as a collapse in traditional values. But on the Conservative Right, plenty of people will tell you that UKIP is in danger of splitting the right-wing vote, and handing victory to Labour in lots of seats. They see ample evidence for this in the results now flooding in after yesterday's local elections.

Though this is expressed less loudly, the implicit appeal of an in-out referendum to many on the Tory right is also, not to put too fine a point on it, that they want to leave the EU.

Nobody could accuse Lord Mandelson of being motivated by Euroscepticism. In the same Hands Lecture this afternoon he will match his call for an in-out referendum with a plea for Britain to contemplate joining the euro one day, a suggestion that Sir Humphrey would call "brave" and which in part reflects Lord Mandelson's retirement from the messy business of getting elected.

So is he right? His analysis of the democratic deficit is hard to fault. Drawing on new polling by Policy Network, the left of centre think tank of which he is president, Lord Mandelson notes that 56% of respondents want a referendum on British membership. He also notes that the mandate secured by the government of Edward Heath in the only ever British referendum on Europe, in 1975, "belongs to another time and another generation".

He also argues that:

a fresh referendum on this will be necessary because the political parties cannot reconcile their own differences and come to a final conclusion on their own, and nor should they. While the Conservative Party is the home of visceral hostility towards Europe, to an extent, negative feelings about Europe are now more present in all the parties

All that feels like an accurate reading of British politics, and is duly being taken seriously in the press and on the blogosphere.

Before I venture my own opinion on an in-out referendum, I would make the case that, in fact, the most important argument in Lord Mandelson's lecture lies elsewhere. The former EU commissioner spends some considerable time examining the level of integration—whether fiscal, political or otherwise—that is likely to be needed within the euro zone to save the single currency. And he suggests that if such integration does take place within an inner core of 17 countries that use the euro, that Britain will find itself with fewer options than it thinks. In essence, having posed the question: should Britain have a vote about leaving the EU, he poses another: is Europe about to leave Britain? I think he might be right, though I still have a gut instinct that really deep integration in the euro zone is still some way off, for the crude reason that, as this crisis is revealing every day, we Europeans do not like each other enough to set up an American-style system of fiscal transfers.

Lord Mandelson draws a neat historical parallel between Sir Winston Churchill's 1946 speech in Zurich, in which he urged France and Germany to form a United States of Europe while suggesting Britain would remain a friendly onlooker, and the present government's stance of urging euro zone countries to follow the "remorseless logic" of currency union and embrace much closer integration, without involving Britain. Churchill, says Lord Mandelson, was of the last generation of senior British Conservatives to adopt a stance of urging much closer European integration without any desire for Britain to join in... until the present generation of Tory leaders, led by David Cameron and George Osborne.

Here is his take on the overlap between that wary, go-ahead-without-us stance of the Cameron government and the UKIP desire to leave:

We have long tried to believe that the EU would keep getting wider rather than deeper and we would never have to confront our own ambiguous feelings about Union. Events are conspiring to call our bluff.

And for us in Britain this will pose a sharp, for some deeply uncomfortable, choice that we have hoped and sought to avoid. A nation of “reluctant” Europeans will have to confront a choice between taking part in greater integration, including joining the Euro, or an uncertain future.

Having posed the problem thus, I don't think I can really end without some form of conclusion or prescription for Britain. I think my biggest challenge is to the pro-Europeans in the UK. In the version of the future that I have described there are two basic ways of being ‘out' of Europe for this country. There is the argument that just says we should be out altogether. The red tape. The bent bananas. The gravy train. What has become the UKIP view.

Then there is the argument that a looser relationship, a place on the second tier is fine for Britain, not out but not fully in. A Hong Kong to Europe's China. Or a Canada to Europe's United States. The second, I think, is where the current government, or the Conservative part of it, probably would be happy to come down.

My view is that both will probably amount to much the same thing

I think I am coming round to that point of view. I have written several times over the last couple of years that though Britain does not intend walking out of the EU, it could fall out.

I am with Lord Mandelson in thinking that there are grave dangers to walking out. I have written columns and blog postings arguing that in their cost-benefit analysis of EU membership, Eurosceptics routinely get their costs and benefits wrong, both underestimating the present value of the single market and overestimating the ease with which Britain would negotiate a more attractive free trade pact with the rest of Europe.

Where I think I part company with Lord Mandelson is that, crudely, there are things that Europe could turn into that would make me change my mind, and want to leave. There are degrees of integration, involving market-unfriendly corporatism and barriers to competition or claims to have created pan-European democracy via the European Parliament or a directly elected President of Europe, that I think would be intolerable, and also unsustainable (because I think that pan-European democracy is a fantasy).

Where I differ from British Eurosceptics is, crudely, that I think that we are some way away from that point of intolerable integration, and that for now the risks of departure greatly outweigh the advantages.

Lord Mandelson seems to be arguing that the risks of departure will always outweigh any advantages. Here is how he describes Britain's fate if it either walks out of the club, or sits in an inner circle outside a more integrated euro zone:

We will still have to meet EU standards to trade with Europe. We will simply have no or little voice in defining them. We will still seek to align ourselves with Europe internationally most of the time, as a matter of political and practical necessity.But we will have less say in Europe's own policy deliberations. For this reason, both outcomes seem badly flawed to me and should be rejected

He goes on:

Britain's eurosceptics are busy patting themselves on the back for their historical resistance to joining the euro. But it seems to me that assuming that the Eurozone is doomed to perpetual failure is assuming a lot. There is a strong case for a European single currency and in practical respects it has worked well. It is the currency union that is politically and institutionally flawed, the crisis may in fact be the key to its success – by forcing the necessary institutional and political reforms. The economic logic for staying outside the Eurozone can and probably will change. As the euro continues its rise to a global reserve currency. The logic for London and the euro may be the same. Hong Kong's strength is in large part a function of mainland China's weakness, and for all its problems, Europe hardly fits that picture.

Throughout this lecture I have purposefully tried to be as dispassionate as possible but you will have guessed where I stand. I believe in a prospect of euro-membership and closer political union and economic governance. Partly, I recognise, this is an emotional choice – I identify as a European.

But it is also because I believe that – if I can paraphrase Mrs Thatcher – for Britain, the facts of globalised life are European

Which makes his support for an in-out referendum all the braver. Such a vote, he says, "would not be relevant until the new shape of Europe, and the success or otherwise of its Eurozone Mk 2, finally emerges and a considered judgement is possible, something which is likely to be a fair way off".

But he is ready to risk one.

For what it is worth, and with grave misgivings, I suspect he may be right. My misgivings are mostly tied up with the fact that a clean, in-out referendum would be hard to achieve. The central problem with British public opinion and Europe is that, when asked, most people want something that is not on offer. The new Policy Network polling falls squarely into this camp. As the think tank reports:

36% of people think Britain should stay in the EU but only as a member of a free trade area, 18% as we currently are but with no further integration, and 14% of people say the UK should stay in the EU and play a full role in any further integration. A third think Britain should leave

Policy Network writes that up as 67% of voters wanting to stay in the EU, but that is a stretch. I would argue that it really shows two thirds of people either wanting to leave or achieve a pure free trade relationship (which means leaving, in truth), plus another 18% wanting something that is not going to happen, ie, no further integration. That adds up to 87% or so being unhappy with the current arrangements.

So given that I would argue strongly for staying for the moment, why would I want a referendum? Well, the optimist in me thinks that a referendum would force everyone to have a more honest debate, and explain the choices that really are on offer. The pessimist in me thinks that the debate might end up being pretty horrible, but that the status quo is just not very good for British democracy.

As it happens, to end a long posting, I suspect that those wishing for Mr Cameron to include an in-out referendum in the Conservative manifesto at the next general election will be disappointed. Yes, I can see that a continued UKIP surge could put intense pressure on Mr Cameron. Some speculate that Ed Miliband, the Labour leader, could trump the Tories and call for a referendum (though I wonder if Mr Miliband would want to risk such a vote, given his strong pro-European views). But surely the biggest problem for the Tories is that, if they suggested a referendum, they would then have to explain which way they would want the British people to vote.

If Conservative leaders made it plain that they would campaign to stay in (which would tally with everything that the prime minister currently says in defence of the single market), then the UKIP threat would not really be neutralised, would it? The Conservative Party in Parliament would also see some splits.

But if the Tory Party called for a referendum and then said that it would campaign for a vote to leave, that would make the whole election about Europe, bringing out every last voter-frightening obsessive on the pro- and anti-side.

And a fudge, in which party leaders said that Tory MPs would be free to campaign on Europe after the election according to their consciences, would also not really do the trick, either, surely? Because that would not stop people asking Mr Cameron what his own views were in interviews and in the televised leaders' debates during the general election campaign, and that would open up most of the traps and splits described above.

But the issue is not going to go away, and even Euro-pragmatists like me need to acknowledge that. Europe is on the move in unpredictable ways. Britain is not going to be able to stand on the sidelines forever, offering helpful advice.

Thank you, Cutters, for exposing the basis of your hatred of the EU. Of course it's because 'senior Eurocrats' aim to abolish Britain, just like they want to abolish the English Channel, eliminate English as a world language and force poor British citizens to become peasant farmers.

Really, if you can believe this you can also believe that the German Foreign Minister is a 'Senior Eurocrat' (if he is, it's to exactly the same extent as William Hague) and that Bagehot, Mandelson, and (for all I know) I are all part of the great EU conspiracy probably led by the Knights of St John.

It might also be catastrophic. Since no country has ever left the EU, the outcome of withdrawal is hard to predict, after 40 years as a member. The UK is not Norway, which has a small population and vast oil reserves, nor is it Switzerland, whose political neutrality has made it a safe haven for financial deposits. A more pertinent example of a proud independent Atlantic island nation outside the EU is Iceland, and that went bust recently, if I recall correctly

The Fascist €U would have no say on financial regulation in Great Britain, and Great Britain pulling out of the €U would boost the City. There would be no possibility of a Financial transaction tax being imposed from Brussels, no way for €U commissars to impose anything in Great Britain.

What the continent is facing is purely down to the corrupt practices of the continent and €U commissars. A failure to publish correct accounts and a culture of looking the other way to 'protect the project'. It is totally naive, irrational and illogical to consider any differently, as the facts are quite clear that there are systematic failings at a conventional and €U level to uphold the rules.

The €U club are putting out the begging bowl when it is clear that they have reserves enough to sort this out themselves. If the continent wants any credibility, it needs to stop scavving and sort out the mess it got itself into.

And what it also shows is the folly of isolationism. The outside world can come back to bite you, as the USA learned to its cost in 1941. This idea of a United States of Europe. I can see where it originally came from. If you're going to have a functioning economic union, there has to be some form of political union too, again looking at the success of the USA.
It's a good technocratic argument, but unrealistic. Not just from a British point of view. European history shows that this has never happened since the Roman Empire, and that had to be held together by force. I doubt whether the man, or woman, in the street, in any European country, not just the UK, can be persuaded to accept that.
On the other hand, it would be wrong to dismiss the EU as totally malign. When the former Communist countries of Eatern Europe broke free of the iron curtain around 1989, a good number of them joined the EU. All of these have remained democratic since then, none of them have lapsed back into Communism, and it's unlikely that they will.
Contrast that with the former Yugoslavian states, outside the EU. Even NATO could not prevent the Balkan wars of the 1990s, nor indeed the recent spats between Russia and Georgia.
So maybe we shouldn't throw the baby out with the bathwater.

FBJ On 04/05/2012 the EU and the US entered into a customs agreement (OK, not a union). This allows that the EU and the US recognise each other's "trusted traders". There are currently over 5,000 such in the EU. Amongst the several benefits on offer are simplified customs procedures (eg fewer inspections of goods) and, thus, lower costs.

I mentioned Norway specifically because (a) many eurosceptics have claimed Norway as a possible model for future UK relationships with the EU; (b) because I am aware of an official, recent, in-depth review of their relationship with the EU. This available on line. I believe Switzerland has undertaken a similar review but cannot find references to it.

On 07/01/2010 the Norwegian Government set up a cross-party Committee to review the consequences of the EEA and Norway' other agreements with the EU. The Committee reported on 17/01/2012 (Official Norway Reports NOU 2012:2). On domestic policy consequences they find that EU law has been incorporated in 170 out of 600 Norwegian Statutes and approximately 1000 Norwegian Regulations. Overall, in 20 years, Norway has incorporated approximately 75% of all EU legislative acts into Norwegian legislation. (And has implemented them more effectively than many EU states, they claim).

I respect your views but, we must agree to differ. The British view is not predicated as you suggest by "Past Glories and Empire", a quite short lived period in our history, we do not hanker for the past, but awareness of the past informs our today.

The EU suffers from one main problem, it has been far too hurried in what it has attempted to do with regard to the nation states that make up its membership. This foolish haste has been driven by the vainglorious egos of politicians each wanting there to be a statue erected in their home town emblazoned with "The Father of Europe", like some modern day Charlemagne. What nonsense and where are they now, are their names even remembered ?

"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.[

Europe is old, if these national borders were ever to have dissolved naturally then surely they would have done so after the end of WW1 the watershed event of the 20th century ? But no, and here we are today with the Leaders of the Euro countries caught in an "orthodoxy of thinking" no different to WWI Generals constantly feeding their troops over the top into a hail of machine gun fire.

In "defence of the Euro" they are sacrificing whole economies, reducing their citizens to despair through their stubborn refusal to think differently. The currency should have been split in two 18 months to 2 years ago with Germany and others leaving the Euro to form a new D Mark zone and letting the Euro devalue to a natural level. But such a tactical withdrawal, such a taking of breath was beyond their wit and intellect to imagine so all must be condemned in the bonfire of their vanities.

So my friend, your new bright shiny Europe is nothing but the same old tawdry whore of yesteryears, nothing has changed, nothing has been learned and lo, we even see the rise of both the extreme Right and Left again, those same Vultures last seen in force during the 1930s. What will we then see once the European economy lies in tatters because of political fools now in power ?

Sit at your seaside cafe, warm your bones, be at peace and be content that however incomprehensible to you, a totally sceptical Britain is a major asset to Europe. We do not seek to strut upon this stage but we will influence it beneficially for all, in the end.

"NORTH AMERICAN Free Trade Association"? It's going to have to be a pretty big bridge, or else need a considerable seismic shift, for Britain to be geographically eligible to join this. Unless of course we sign up to the US consitution as the 51st state. "Airstrip One".

What do you think membership of the EU is, something you revote on every ten years? The decision was taken in the seventies and now the UK economy and indeed wider society is completely enmeshed in the Union with about 45% of British exports going there compared with barely 20% to the entire Anglophone world. A purely trade relationship isn't, as Bagehot points out, on offer and withdrawal would be an economic catastrophe not to mention making the UK even more a political dependancy of the US.

Ted Heath, for all his faults, and Harold Macmillan before him, had the foresight to see that the days of Empire were over, weren't coming back, Britain wasn't going to be the world power it used to be in the future, and it made sense to join a trading bloc with our near neighbours.
The problem, if there was one, was that the European Communities had been formed a couple of decades before we joined, and because we had sat on the sidelines when they were formed, we'd had no influence in the shape they took. There may not have been this perceived Franco-German axis controlling it had we been involved from the start. After all, they'd fought each other 3 times in 80 years. They wished to prevent a repeat.

FBJ The EU is not a customs union: it is a Single Market. This was established by the Maastricht Treaty, which requires the "four basic freedoms" - free movement of goods, services, capital and people.

For info, the EU has recently concluded a customs union with the USA, which recognises named 'trusted customers' in each.

Norway has carried out a review of its EFTA relationship with the EU and has concluded that a massive percentage of its laws are "made in the EU" (ie Norway has no say in their development but has to apply them, in accordance with the EU/EFTA agreement.

It is said to be impossible for a nation to leave the EU, which I find debatable, at the least. However, I do recall that every Prime Minister of the UK in the last 40 years plus (including, especially, Mrs Thatcher) has supported the continuation of the UK's membership.

Countries from Mexico to Isreal to South Korea have negiotated free trade agreements with the EU and others from Canada to India and Japan are in the process. It is pure head-in-the-denial of reality to suggest that the UK could not do likewise. The Uk is indeed in a stronger negotiating position than any of the countries which have agreed FTAs with the EU/when's thanks to the trade deficit Britain runs with large continental countries who would be cutting their own throats if they were to introduce barriers to trade with the UK that is very profitable to them.

That British EU supporters have to restort to scare-mongering shows that paucity of their arguments for the wealth-destroying and democracy-destroying institutional monstrosity in Brussels.

The British want free trade. So they say they want to sail away from the EU, this awful "corpse" that is actually the largest free trade area in the world. I think I will never understand this paradox. Probably because I am a poor stuborn, burocratic and sclerotic continental. Can anybody from the free world enlight me?

OK one last constitutional point on referenda. In 1972 Parliament voted to join the European Communities, as they were, which had 9 members. This was subsequently ratified by a two thirds majority in a referendum in 1975. So now we're in a European Union with 27 members. If the argument is that the present generation hasn't had a chance to vote on this, do we keep holding one every 30 years or so? If the argument is that it has changed since then, due to the Single European Act (approved by Mrs. T.) and Maastricht, shouldn't there have been a referendum before those alterations were allowed to happen, not after it has changed in a way we can't reverse?
And finally; suppose there were a referendum, and the British population voted to come out, so we left. Then a few years later, under a different party in Government, it was decided that the country had suffered as a result of coming out, and we'd have been better off staying in (who knows?), then what? Do we have yet another referendum to see if we can rejoin? Is there ever a final answer on this subject?

"However, neither is it the reason for peace in Europe". Maybe, maybe not. Like I said, NATO didn't prevent the Balkan wars, though it did play a role in bringing them to an end.
We shouldn't forget what the EEC's originators, notably Schuman in the 1950s, were trying to prevent, namely, another major conflict between the principal European powers. You might argue that NATO has prevented that, though I've a feeling France has left that organisation, or did at one point.
I don't, however, believe that NATO can take credit for the establishment of enduring democracy in Eastern Europe. With the borders, in some cases, not long established, and no real history of accountability, there was every chance that these fledgling democracies could fail, as happened during the inter-war period, or that minor border disputes could flare up, as happened quite a few times in the 1920s and 30s. I have mentioned the former Yugoslavia. Tito was the glue that held that together, and his demise led to a bloody conflict. Russia, Ukraine, Belarus are not in the EU, and their democratic credentials are rather dubious. I don't think it's just a coincidence that relatively new EU entrants such as Romania have not gone backwards with them.

Too true. Here's an example of how we left the continent behind. In 2003 the French and German leaders refused to take part in the invasion of Iraq, stating that they did not believe there were weapons if mass destruction. And of course got slated by the patriotic British tabloid press as lily-livered cowards. Meanwhile, loyal Britain valiently followed our beloved Uncle Sam in removing and destroying those weapons, which we knew were there really. Anyone remember how many they have found so far? How many lives were lost in the process?
Sorry, I'm undoing history again. Must stop it.

In this blog, our Bagehot columnist surveys the politics of Britain, British life and Britain's place in the world. The column and blog are named after Walter Bagehot, an English journalist who was the editor of The Economist from 1861 to 1877. The blog is currently on hiatus after a change of Bagehot columnist.